Question

Provide a detailed explanation of concept of a Value Chain and apply the concept to a company of your choice

Answer 1

Value chain concept refers to essential activities contributing to enhance value of a value chain. It consists of primary and supporting activities. The primary activities are inbound logistics, operations, and outbound logistics. Inbound logistics refers to activities related to receive the inputs, store them and distribute them. Operations refer to transforming inputs into outputs through manufacturing activities. These can be packing, maintenance of equipments, testing of manufactured products, etc. outbound logistics refer to those activities that are performed to store, as well as disseminate the outputs or finished products. Marketing as well as sales activities assist buyers to know the products and services. Such activities are carried out to induce them to buy manufactured products. It can include sales promotion, advertising, selection of channels, etc. Service includes those activities such as repair, installation, supply of parts, etc.

Support activities are carried out to support primary activities. These are procurement of raw materials, management of human resource by enhancing skills of employees, and strengthening infrastructure of the company.

Starbuck Company is one example of value chain concept that demonstrates excellent activities to enhance value chain network performance. Inbound logistics of the company appoints buyers of raw materials such as purchasing finest cocoa beans. These raw materials are stored and distributed to the manufacturing house. Operations activities include distributing the opening more retail outlets to sell coffee based products. Outbound logistics of the Starbuck Company does not include any specific activity as the products are generally sold by the licensed stores of the company. Starbuck Company practices excellent customer relationship service. For service, the company provides customer service to build loyalty. Supporting activities such as strengthening the infrastructure by having sound financial resources and investing in human resource skills development are practiced by the Starbuck Company. The company also invests in technology to improve its service and products. These activities of the company make its value chain network very effective.